7 Solutions to Inventory Management Challenges

Any organization that holds inventory or stock is bound to face some inventory management challenges. The international trading landscape is continually changing and is more uncertain than ever. Problems like fluctuating demands, quality control, and human errors are common in inventory control, and the same must be managed so that the revenue balance remains intact.

In business accounting, inventory expense management plays a vital role. Businesses use accounting software to keep track of expenses on inventory items and the value of sold items.

Challenges in Inventory Management and their Solutions

There are many problems like forecasting the demand, quality control, and maintaining accuracy that binds the inventory management of a business. Trading companies give their best to overcome these to maintain their overall revenue balance.

1. Forecasting the demand for products

Digital revolution may be upon us, but there are still many manufacturing companies who have difficulties in forecasting the future demand of their products. They fail to meet the customer demand or manufacture goods in excess resulting in the revenue drain.

The main problem behind this is the abstinence from advanced reporting tools that can predict the product demand.


Appropriate reporting tools such as Zoho Inventory and Brightpearl must be used that can make it easier for the manufacturing companies to target sales and predict how many and which items should be produced for future sales. These tools help to analyze customer behavior, giving an idea about which products the customers are interested in while they make a purchase.

Hence, slow-moving and fast-moving products can be differentiated. Other factors, such as market trends, increasing fuel rates, etc., should also be considered, and the sales and marketing teams should be updated with this information.

2. Increasing ROI

Manufacturers usually increase the price of their products to increase their ROI (Return On Investment). However, this is not a very effective way as increasing the price would abstain the customers from purchasing the products.


The best way to deal with the increasing ROI is to invest in an accounting outsourcing firm. By outsourcing your processes to an inventory management service, you make sure that you are always prepared for any market changes and fluctuating product demands. This would help you to determine the most effective course of action for your business growth. Outsourcing helps manage the overhead expenses by efficient market analyses, enhances the accuracy of your invoice process, and reduces the workload of the in-house human resources.

3. Quality control

Quality control is an important aspect of inventory management systems. However, this is often compromised when the same workers who are in charge of the quality also do the pickup, packing, and transportation of the inventory items. In such cases, any quality errors are ignored, and they never reach your knowledge.


If possible, it is a good practice to have a separate level of inventory quality control to manage the supply chain issues and ensure better inventory management. This will encourage accountability, and a separate level of authority will make sure that everyday inventory issues are addressed in a structured manner.

This quality control function can reduce the need for manual processing of inventory items and record vendor accuracy. Hence, this quality control system will provide a structure to your inventory management and will ensure that the warehouse management system is functioning as intended.

4. Seasonality in demand

One of the major challenges that the warehouse managers face is fluctuating product demands. A certain rise or dip in the sales of particular products can take a toll on the manufacturing industries. Hence, proper analysis of your inventory, with respect to the market, at all times becomes a priority.


It is important that you forecast the product demand during a particular season and order or manufacture products accordingly. The stock control software like QuickBooks, NetSuite ERP, Zoho Inventory, etc., can really be a help, as with real-time data, it becomes easy to deal with the market fluctuations.

Accurate inventory data should be maintained as it enables you to stay on top of your stock levels and plan accordingly for future seasonal variations.

5. Keeping an accurate warehouse inventory

To manage the warehouse systems, keeping an accurate count of the inventory items proves to be a challenge. Human errors such as errors in everyday order picking can create some discrepancies in the overall inventory count. If left unattended, these errors can cause puzzling gaps in the inventory count over a long period of time.


Training the warehouse workers intensively to maintain accuracy can be an answer to this problem. The selection of a simple and efficient inventory management system is important, which is easy for all the workers to understand. Any inventory discrepancies should be tracked down as and when you get the time. Mostly, the mis-counts arise from misplaces items. Make sure that the inventory counts take place after short durations so that the accuracy is always maintained.

6. Coping with the new technology

Technological advancement is upon us, but still, many manufacturing companies use manual processes and outdated inventory management systems. This practice leads to an inefficient work process and renders easy tasks to seem laborious.


The most effective way to cope up with this problem is to modernize the inventory control processes and to systematize the workflow. Familiarization with the new technology, like cloud computing, can help the manufacturing industries to spurt business growth.

A cloud based inventory management system comes along with operational efficiency, cost saving and many other benefits. This systematic approach will also make the warehouse environment error-free and much more organized.

7. Lack of internal communication

For maintaining a proper structure of a business, it is important to maintain good internal communication among various departments. The same implies for inventory management.

Employees in the distribution, procurement, and sales department need updated information which is sometimes unavailable, creating discrepancies.


Make sure that there is never a lack of a common platform to communicate and discuss market strategies. The stock control software, like Ordoro and Zoho, can be used to enhance communication and bring all the departments on the same page. Such solutions help link all the teams with their respective usage of stock.


We see that though the purpose of an inventory is to be sold, it’s proper management brings the company high profit. Inventory management greatly helps with the cash flow of the company and makes a significant impact on the overall revenue.

Technological advancements in inventory control systems should be adopted to streamline the business. It is also required that the warehouse management be done efficiently, and there is no lack of internal communication.

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